I haven’t been as active blogging for the last few years as my activities have been undergoing a bit of a shift. I spent a number of years focusing on leadership as a major opportunity for improvement, particularly in technology firms that are transitioning from startup to scaleup.

I’ve had the opportunity of doing research at the University of Toronto with the Impact Centre for the last several years and that research has really widened the scope of the work I’m doing. This research has identified that the three main opportunities for improvement that aspiring technology forms have are:

Improving product/market fit to ensure that there is a big enough potential for growth.

Raising enough capital to support that growth.

Adapting to leadership challenges that result from growth.

While I’ll still be blogging on leadership, I intend to spend more time in the future blogging about marketing and finance as well. In addition I’ve changed the website to reflect the change in focus:

The name has been changed from Material Minds to Scaleup OS to reflect the emphasis on the issues faced by scaling technology businesses.

A whole new section that focuses on research on this and other issues has been added –Scaleup Research

The section on Best Practices has been changed to better align with the issues faced by scaling firms.

I will be bringing more people into the development of the site over time to expand its potential.

Thanks for continuing to receive these random musings and given the change in emphasis I would totally understand your desire to discontinue receiving them. If not, I think you’ll find me blogging more often once again on issues that matter as technology firms transition from startup to scaleup.

We’re doing something wrong in promoting gender equality and I think it starts all the way back to how we name babies. We have a patrilineal naming tradition that asserts to a baby girl that her father is more important than her mother. To me this is the beginning of gender inequality.

As my daughter is now expecting my first grandchild and it is to be a girl, I want her to start life thinking that she is just as important as any boy who is born. To do that I’m advocating a new tradition that a girl’s last name be the same as her mother’s last name.

I’ve written an essay that got published in the Globe and Mail today. It explains a new solution to stop gender inequality at birth.

I was looking at a performance plan and bonus scheme for someone today and noticed a rather problematic hurdle. That’s one of those statements that says you get a $10,000 or whatever bonus if revenue exceeds $1 million. These weren’t the numbers but I blanched at the amounts as the bonus was large and the hurdle was high. It was so high, it was almost a cliff.

I’ve worked with people before, who when they realize they don’t have any chance of meeting their bonus, sandbag sales in order to shift them into the next year. The same thing happens with ceilings. In the old days IBM had a rule that no one could earn more that the President. That stopped more than one sales rep from selling late in the year.

The problem is, what do you do about performance hurdles and ceilings? I think ceilings are stupid. You can get burned one year without a ceiling but you can change the comp plan the next year so the expected revenue is more in line with reality.

But hurdles are another matter. How do you set a minimum standard without a hurdle. I don’t think there is any way to deal with them except through one of my favourite tools, trailing 12 month averaging. Paying every quarter or even monthly based on the last twelve months results doesn’t penalize or benefit anyone for sandbagging and you can adjust the hurdle rate to make it more realistic on a regular basis.

I know one company that pays bonuses based on weekly results. You can have an off week and it won’t affect the rest of your month. It also means that you can’t slack off for very long as you’re being measured all the time. They have hurdles and they work when measured weekly.

Complex to administer, maybe but it gets rid of quarter and year end stuffing which inevitably leads to operating issues and it keeps people on their toes all the time.

I’m teaching a course at U of T in Continuing Studies in the fall called Connecting Strategy with Action. It’s all about driving superlative results through better strategy execution. The most remarkable outcome of students who take it is how they end up shifting their whole management focus from activities to results.

In the course we talk about employees three greatest needs:

To know exactly what is expected of them.

To know how they’re doing.

To understand how they can improve.

I prepared this document as an outline of the course and thought I should share it here as well.

I’m continually finding interesting entrepreneurship research (among many topics) and thought that it might be useful to share it from time to time. I share on Twitter but it probably just zings by quickly so here is some interesting stuff.

My favourite entrepreneurship research of the week is about failure. I’m glad to see that failed entrepreneurs are much more likely to be successful on their second go round. This of course means that we’re willing and able to learn from past mistakes.

While I disagree with these findings of this research it is because it asks opinions of leaders and doesn’t do any empirical research into the subject of causal factors for success. In any case it is an interesting question to ask.

Accelerators and Incubators have become much more prevalent in recent years to assist startups. I was amazed to find that there were 464,819 entrepreneurs applying to 2,856 accelerator programs. I was flabbergasted to think that there were that many of each.

Finally to something that is disappointing and probably not a surprise. Research by Y Combinator has found that it funds startups with women on the founding team at a lower percentage than those startups’ application rates.

I’m back to talking about science and physics as a way to understand fixing business entropy. (See definition if you missed that blog. This may be boring or confusing but if you read it, I promise it will be good for you.)

If you look at entropy in physical or scientific terms it is pretty easy to see how to fix it. Don’t forget that entropy results in a closed system through the equalization of energy among all elements of that system.

So to fix entropy in a physical system you need to add new energy from the outside.

Fixing Business Entropy

Same in business. Fixing business entropy means applying an outside force to find out why chaos is occurring and develop solutions for that chaos.

It can’t be done from the inside due to the nature of entropy. For a person within the business to address chaos, it would mean doing a regular job managing the chaos and adding extra time to deal with the resolution of it.

The extra effort rarely exists and rarely works because all other employees in the business will resist any application of force that would cause them to exert more than the minimal amount of effort required.

That’s where consultants come in. A consultant is an external force that can look objectively at why chaos is occurring, recommend solutions and drive implementation.

Then the consultant can go away and the business is left to slowly devolve into entropy all over again. Entropy is inevitable and that’s why consultants are inevitable. They are the outside force needed for fixing business entropy.

(And I hope that consultants everywhere can use business entropy as a justification for their existence.)